On 6 April this year the IR35 legislation’s latest changes
came into effect, closing the loophole on tax avoidance and handing the onus of
the contractor’s tax status over to the client. Small businesses, however, are exempt from the changes.
What is IR35
IR35 came into effect in April 2000. The legislation is
designed to differentiate between those workers who operate as genuine
contractors and those who work as ‘disguised’ employees to avoid paying the
right amount of tax.
What has this meant for contractors
Tax efficiency has made contracting an attractive option
for many workers but the IR35 legislation means that contractors operating in
the same way as permanent employees will no longer be able to reap the tax
benefits.
As of May 2021 there was approximately 4.2 million
self-employed workers in the UK proving that, IR35 legislation aside, contracting comes with many benefits such as flexibility, work/life balance and great
network and career opportunities.
What does ‘inside IR35’ mean?
When a contractor sits inside IR35 it means they must pay
the same tax as the company’s employees. It may also mean that they have
additional rights similar to permanent employees e.g maternity pay, minimum
wage etc.
What does ‘outside IR35’ mean?
This is when a contractor works for their own limited company
and cannot receive any employment benefits from their employer. As they operate
for their own limited company they will pay themselves a salary and remain
responsible for their taxes.
How we are supporting clients and contractors
- We have had a proactive approach, partnered with experts,
undergone training, given legislative updates.
- We strive to be the de facto recruitment partner to our
clients therefore we’ve focused on educating our sales consultants, clients,
and contractors.
- Sales and compliance teams have worked as one team whilst
speaking to clients and candidates.
- Regularly train our sales team so they are confident around
the topic of IR35.
- Online IR35 Hub to help with any contractor or client
queries
If you would like to know more about the changes around IR35
or how we can support you visit our IR35 Hub where you can find our client and contractor guides and an off payroll
rules webinar and other IR35 blogs that you may find useful.
If you’re looking for a contract role in one of our life
changing industries, submit your CV today and one of our team will be in contact as soon as possible.
